(pages 5/6)

These projections are based on the assumption that the IEA crude oil import price
averages $100 per barrel (in real year-2007 dollars) over the period 2008-2015,
rising to over $120 in 2030. This represents a major upward adjustment from last
year’s Outlook, reflecting the higher prices for near-term physical delivery and for
futures contracts, as well as a reassessment of the prospects for the cost of oil supply
and the outlook for demand. In nominal terms, prices double to just over $200 per
barrel in 2030. However, pronounced short-term swings in prices are likely to remain
the norm and temporary price spikes or sharp falls cannot be ruled out. Prices are
likely to remain highly volatile, especially in the next year or two. A worsening of the
current financial crisis would most likely depress economic activity and, therefore, oil
demand, exerting downward pressure on prices. Beyond 2015, we assume that rising
marginal costs of supply exert upward pressure on prices through to the end of the
projection period.
Combined with our oil-demand projections, these assumptions point to persistently
high levels of consumer spending on oil in both OECD and non-OECD countries. As a
share of world GDP at market exchange rates, spending soared from 1% in 1998 to around
4% in 2007, with serious adverse implications for the economies of consuming countries.
That share is projected to stabilise at more than 5% over much of the Outlook period. For
non-OECD countries, the share averages 6% to 7%. The only time the world has ever spent
so much of its income on oil was in the early 1980s, when it exceeded 6%. On the other
hand, OPEC oil and gas export revenues jump from under $700 billion in 2006 to over
$2 trillion in 2030, with their share of world GDP rising from 1.2% to 2%.

Most incremental oil and gas will come from OPEC – if they invest
enough
World oil supply is projected to rise from 84 mb/d in 2007 to 106 mb/d in 2030 in
the Reference Scenario. Netting out processing gains in refining, global production
reaches 104 mb/d. Although global oil production in total is not expected to peak
before 2030, production of conventional oil — crude oil, natural gas liquids (NGLs)
and enhanced oil recovery (EOR) — is projected to level off towards the end of the
projection period. Conventional crude oil production alone increases only modestly
over 2007-2030 — by 5 mb/d — as almost all the additional capacity from new oilfields
is offset by declines in output at existing fields. The bulk of the net increase in total
oil production comes from NGLs (driven by the relatively rapid expansion in gas supply)
and from non-conventional resources and technologies, including Canadian oil sands.
The bulk of the increase in world oil output is expected to come from OPEC countries,
their collective share rising from 44% in 2007 to 51% in 2030. Their reserves are, in
principle, large enough (and development costs low enough) for output to grow faster
than this. But investment by these countries is assumed to be constrained by several
factors, including conservative depletion policies and geopolitics. Saudi Arabia remains
the world’s largest producer throughout the projection period, its output climbing

from 10.2 mb/d in 2007 to 15.6 mb/d in 2030. Non-OPEC conventional oil production is
already at plateau and is projected to start to decline by around the middle of the next
decade, accelerating through to the end of the projection period. Production has already
peaked in most non-OPEC countries and will peak in most others before 2030.

PS, you can now afford carbon offsets to hedge the footprint of that SUV ;)
http://www.edf.org/page.cfm?tagID=23994

If you are out there, I will wager you a Whopper that initial claims are above 510k Thursday.

Bet?

Bruce in Tennessee

The RBOB futures indicate a potential price collapse, assuming 40 gallons of gas per barrel of oil. This means the pump price in a moderate tax state should fall to maybe $1.50 or less in a couple of weeks. Since credit is not going to burst out of control soon, this means the price of oil should approach the price in a competitive model, and stay there for a long while. OPEC has no power to do anything other than make basic production decisions that affect inventory and storage. They will whine like babies, but that’s about all they can do.

Do GM a favor and buy a new big car at a gigantic savings. It’s safe to cruise around in the SUV again. OPEC is an empty threat.

Also, do yourself a favor and think about putting some cash to work in Energy Services. The price of oil may be falling, but it still costs a lot to drill new wells, and demand is not anywhere close to being destroyed. Only the price. I have some cash there and plan to put more in as the sheep sell into the commodity price drop.

I vote for slapping federal taxes on gasoline, removing CAFE restrictions, and letting the market and Rational Actors do the work of economizing the fleet, bankrupting OPEC, etc.. Use that $$$ to pay off debt, offset defense spending to protect access to oil and freedom of the seas, rebuilding highway infrastructure (redeploying all those idle housing contractors and engineers), or even foot the bill for zero-interest loans to restructure Detroit (though they’ve already been slammed hard on fuel-economy).. Call it $3/gal phased in over 4 years at 75c per year.. That’s still ridiculously low compared to the rest of the industrialized world..

I’d even say add minimum liability insurance to the price of gasoline as well! You only pay for the insurance you use as you drive, no more uninsured motorists, yet another impetus for economic cars to “save the planet” and bankrupt the arab SOBs… Leaving diesel alone of course, as increasing its price adds cost thru the industrial economy (commercial transportation), so those of us with diesel vehicles would continue to purchase insurance as is done now..